20 · Other UK Customer Loans – £9.5bn UK Mortgages – £19.6bn n LondonScotland £1.2bn n...

2020

2020 Interim Results Announcement30 June 2020

Bank of Ireland 2020 Interim Results

3

Group CEOFrancesca McDonagh


5

H1 2020 Summary

H1 Performance

Transformation

Asset Quality

Capital

• Total income reduced 13%; lower business income and valuation item movements

• Stable net interest income; NIM of 2.02% • Strong cost discipline continues; costs reduced by further 3% vs.

H1 2019 • Net lending growth €0.2bn including €1.3bn of revolving credit

facilities; Irish mortgage market share increased to 25%

• Impairment charge of €937m, of which 60% relates to performing Stage 1 and Stage 2 loans; prudent and comprehensive approach

• Increased NPE ratio 5.8%; credit migration in Q2 and implementation of new Definition of Default regulatory framework

• Proven track record of working with customers to find sustainable solutions; diversified balance sheet across portfolios and geographies

• Cost reduction in each of past five reporting periods; 10% lower vs. H2 2017• Launched new mobile app; strong progress against key milestones• Further Wealth and Insurance digital platforms launched• Impairment on intangible software assets €136m

• Strong capital position; fully loaded CET1 ratio 13.6%, regulatory CET1 ratio 14.9%

• Pre-impairment organic capital generation of 45bps• Completed €675m AT1 transaction in Q2

€669mUnderlying loss

before tax

€937mIFRS 9

impairment charge

3%Reduction in costs

13.6%Fully loaded CET1 ratio


6

• Relationship Net Promoter Score (NPS) improved by 10 points from end 2019; reflecting actions taken to support customers

• Over 100k payment breaks approved for personal and business customers in Ireland and the UK

• Residential development lending fund increased by €0.4bn to €2bn to support homebuilding

• Additional €1bn in funding for green mortgages and loans launched through the Bank of Ireland Sustainable Finance Fund to support a green recovery

• Issued over 50% of all business loans under the government COVID-19 Working Capital Loan Scheme since launch

• Over £0.2bn of approved new lending to businesses in the UK through government guarantee schemes

• Ready to support €2bn Irish Credit Guarantee Scheme

Customers Payment Breaks

Supporting our customers during COVID-19

1 Total approved initial 3 month payment breaks as at 24 July 2020 2 Includes retail business banking property exposures3 Based upon 3 month expiration / responses from c.75% of Irish customers at 24 July 20204 Based upon 3 month expiration / responses from c.54% of UK customers at 24 July 2020

• 105k / €10.1bn initial 3 month payment breaks approved in Ireland (€6.0bn) and the UK (€4.1bn)

• Proactively contacting customers with options at the end of initial 3 month payment break; of those customers contacted:

– In Ireland, c.54% of mortgage accounts and c.62% of SME accounts have availed of a 3 month payment break extension with remainder resuming capital and interest payments3

– In the UK, c.33% of mortgage accounts and less than 10% of consumer accounts have availed of a 3 month payment break extension with remainder resuming capital and interest payments4

Ireland1 Mortgages Consumer SME2 TotalNo. of accounts 21k 8k 13k 42kExposure €3.1bn €0.1bn €2.8bn €6.0bn% of accounts 11% 4% 11% 9%% of portfolio 13% 6% 30% 18%

UK1 Mortgages Consumer SME2 TotalNo. of accounts 23k 32k 8k 63kExposure €3.3bn €0.4bn €0.4bn €4.1bn% of accounts 14% 10% 16% 11%% of portfolio 15% 12% 15% 15%


7

Enabling our colleagues and communities to thrive

• Colleague engagement up 8 points since Q4 2019 to a high of 70%, surpassing the Global Financial Services benchmark for Engagement for the first time

• 87% of colleagues believe that the Group is quickly adapting to the changing ways of doing business; new ways of working established for H2 2020

• Launched Family Carers Ireland ‘Caring Employers’ Programme

• Allowance scheme for colleagues working in front line and on site locations was extended to July 2020

• Colleague supports include mental and physical wellbeing app, 24/7 health support line, and COVID-19 communications hub

• Over 119k learning courses completed by colleagues in H1 2020

• Proactive and regular engagement with Irish Government and state bodies to support re-boot of Irish economy

• Customers’ view that Bank of Ireland ‘cares about community’ is a key driver of improvement in relationship NPS to June 2020

• ESG progress reflected in improved Sustainalytics ESG Risk Rating from 29.3 to 22.4

• Fast tracking of payments to more than 1,000 SME suppliers nationwide extended for the remainder of 2020

• Donated €1m in emergency funding for communities with urgent needs

• Launched €3m Begin Together campaign to improve financial, physical and mental wellbeing

• ‘Best Bank in Ireland’ Euromoney Awards for Excellence 2020

Colleagues Communities


8

Economic activity has increased but uncertainties remain

• Significant contraction in our core markets March – May 2020, but high frequency data points to an improving environment in Q2 2020

• Reopening of the Irish economy accelerated during Q2

• €7.4bn additional fiscal stimulus announced in July to provide further support towards economic recovery

• Irish government’s response now c.€24bn / c.11% of GNI*

• Claimants of Pandemic Unemployment Payment down to 48% of peak; supportive of continued recovery in H2 2020

• Consumer spending, investment and exports will make positive contribution to Irish GDP growth in 2021

• Alert to risks such as a potential second wave and on-going Brexit uncertainties

Ireland

n GDP1 Unemployment2

n GDP1 Unemployment2

Sources: Forecasts (July 2020) by Bank of Ireland Economic Research Unit; CSO; Department of Finance; Department of Employment Affairs and Social Protection; Department of Taoiseach; ONS 1 Annual real growth2 Annual average rate

2019a

2019a

2021f

2021f

2020f

2020f

5.0%

3.8%

13.5%

5.8%

8.2%

7.0%

(7.0%)

(9.5%)

6.0%

6.7%

5.6%

1.5%

UK


9

Number of Pandemic Unemployment Payment recipients; 52% below peak

Aggregate credit and debit card spend1 (€m) is now broadly in-line with the pre-COVID level

BOI Economic Pulse reflects the gradual reopening of Ireland's economy

Housing sentiment tracking higher

05-May

30-Apr

Apr-19

Apr-19

07-Apr

03-Apr07-Mar

Jan-19

Jan-19

02-Jun

27-May

Jul-19

Jul-19

Apr-20

Apr-20

30-Jun

23-Jun

Oct-19

Oct-19

Jul-20

Jul-20

28-Jul

20-Jul

Jan-20

Jan-20

250,000

800

30

20

350,000

1,300

1,200

1,100

1,000

900

80

80

70

60

60

50

40

40

450,000

1,400

90550,000

1,500

100

100

650,000

1,600

110

120

High frequency Irish data show improving trends

Sources: Dept. of Employment Affairs & Social Protection; Bank of Ireland Economic Pulse; Bank of Ireland Housing Pulse; Central Bank of Ireland1 Card spend data are presented on a 7 day moving sum basis


10

Increasing trend to digital engagement accelerating

• <10% branch transactions are completed over-the-counter

• 1.2m active digital users1 representing c.70% of the current account base

• Over 20m visits per month to digital channels

• New current account origination journey launched H1 2020; fully digitised 100% Cloud service including biometrics

Longer term trend of decline in over-the-counter branch transactions and services

Mobile app now accounts for over 60% of digital traffic

>65% of high volume product applications fulfilled digitally

1 Active digital users: customer has logged in during the past 90 days

(28%)

(61%)

(38%)

Branch H1 2018 ROI Current

accounts

ROI Deposits

ROI Credit cards

ROI Personal

loans

UK Deposits

UK Personal

loans

ATM H1 2019Cheque H1 2020

n H1 2018 n H1 2019 n H1 2020 n Mobile app traffic n Non-app digital traffic

n Digitised n Assisted

53%35%

80%96%

66% 70%

100%

61% 64%

47% 65%

20%4%

34% 30%

39%36%

+5%+7%


11

Transformation delivering customer and cost benefits

• New mobile app deployment; +19 point improvement in mobile app Customer Effort Score since launch

• Enhanced verification capability using embedded third party API technologies

• New card payment technology including migration of 2m customers

• New relationship management tools (Life Goals, Financial Wellbeing)

• Launch of MyPension365; first customers on-boarded in H1 2020

• Full digitisation and automation of end-to-end processes for advisers and employers

• 90% reduction in on-boarding times from 10 weeks to 5 days

• Customers able to manage personal pension in real-time using mobile, tablet or desktop

Forecast growth in defined contribution assets of c.8%1 per annum

41% of insurance sales through digital wallet in H1 2020

• Roll-out of digital advice platform commenced

• Allows end to end digital sale and fulfilment; all sales to be migrated onto platform in H2 2020

• Digital Insurance Wallet launched in Dec 2019 providing customers with choice of provider, quick, easy purchase of general insurance

• Self-service for product adjustments and efficient renewal

• Launch of Broker portal provides secure access point for external and internal advisors

• Allows customers to access self-service options and policy information

• Enables seamless, digital, end-to-end fulfilment experience for brokers and customers

• Fully digitised mortgage application process (Q3 2020)

• New digitised small business lending proposition (Q4 2020)

• Digital payments for mobile app (Q4 2020)

• Refreshed ‘Pay to Mobile’ peer-to-peer payment service (Q4 2020)

• >85% of day-to-day product journeys digitised (Q1 2021)

• Card control features for mobile and online customers (Q1 2021)

Key milestones delivered Delivering market leading digital platforms in Wealth and Insurance

Favourable Irish demographics, growing pension demand, increased deposit base and strength of our franchise provide significant opportunity

Committed milestones on roadmap

Group Pensions

Digital Wealth and Insurance Advice

Platforms

Portal and broker, adviser

connectivity

1 Thinking Ahead Institute research Global Pension Assets Survey 2020


12

Capturing all tactical and strategic opportunities to further reduce our cost base

• Costs reduced by 10% vs. H2 2017 • Costs have reduced during each of

the past five reporting periods

• 2021 costs now expected to be below previous guidance of €1.65bn

• Review underway to further reduce costs beyond 2021: – Continued investment in digital capabilities – Simplifying and automating customer journeys – Additional investment in business model restructuring – Enhanced property footprint, supported by modern and

agile ways of working• Guidance update to be provided at FY 2020

• Cost reduction broad based across staff and non-staff costs since 2017

• €262m in gross cost savings since FY 2017 created capacity to absorb investment in our people and infrastructure

Consistent

Future focus

Broad-based Efficient

2017

H217

2019

H218 H219 Non-staffH120

2018

H118 StaffH119

2020 2021 Beyond 2021

€1.9bn

€964m€933m

€919m€903m

€882m €872m

€1.85bn €1.79bn

€1.9bn

<€1.65bn

(5%)

(13%)

Simplifying the organisation

Change demand /

efficiencies Sourcing strategically

Ways of Working €13m

€156m

€67m

€26m


13

Strategic progress in Retail UK business with further restructuring required

• Protracted difficult market conditions necessitate further restructuring of our retail businesses in UK. A multi-year restructuring programme now commenced:

GB Retail restructuring • A smaller balance sheet and higher margin business: – Run-down of lower margin and less profitable

mortgages over time (UK mortgage loan book £19.6bn) – Grow bespoke mortgage business; c.150 brokers /

£320m of new lending since launch – Leverage expertise in travel money and car finance – Smaller balance sheet will enable further funding cost

reductions – Material reduction in cost base from smaller scale,

efficiency and operating model

• Net interest income: back book deleveraging, lower base rates and mortgage competition impacting NII; partial offset from actions taken on pricing of deposits and new lending

• Other income: commission mix enhanced; income increased £7m vs. H1 2019

• Costs: 7% cost reduction in H1 2020; 23% reduction since 2017• Asset quality: Increased impairments from deteriorating

macro-economic outlook; historic loan losses favourable to industry average

• JV income: no. 1 travel business (FRES) in UK; 2020 income impacted by COVID-19 and reduced travel

• Loan book: improving loan book mix; bespoke mortgage growth and legacy portfolio 30% lower

Northern Ireland Retail• Strategic review recently commenced to

assess options impacting: – £2.5bn of consumer, mortgage and

business loans – £5.0bn of deposit and current accounts – c.200k consumer and business customers

Strategic imperative to improve returns

Retail UK H1 20181 H1 2019 H1 2020Net interest income £258m £250m £239mOther income (£16m) (£6m) £1mCosts (£155m) (£147m) (£136m)Impairment (£12m) (£31m) (£250m)JV income £15m £14m £1mUnderlying profit / (loss) £90m £80m (£145m)Cost income ratio 64% 60% 57%Loan book £24.2bn £24.8bn £24.5bnDeposits £19.0bn £19.2bn £19.5bn

NorthernIreland GB

1 Excludes credit cards, exited 2019


15

Group CFOMyles O’Grady


16

• Underlying loss before tax €669m

• Total income 13% lower; net interest income stable

• Strong cost discipline; costs reduced by 3%

• IFRS 9 impairment charge €937m

• Net lending growth €0.2bn including €1.3bn of revolving credit facilities

• Pre-impairment organic capital generation 45bps

• Strong capital position; fully loaded CET1 capital ratio 13.6%, regulatory ratio 14.9%

H1 2020 Financial Summary


17

H1 2020 Financials

• Underlying loss before tax €669m

• Total income 13% lower; net interest income stable

• Business income 14% lower from reduced economic activity

• Falling equity markets and widening credit spreads impacting Wealth and Insurance valuations

• 3% reduction in operating expenses

• Net impairment charge €937m reflects:

– IFRS 9 macro-economic outlook and model update €432m

– Management adjustment related to payment breaks €184m

– Actual loan loss experience €321m

• Non-core items include charges associated with:

– Impairment of intangible asset €136m

– Restructuring costs €27m

H1 2019(€m)

H1 2020(€m)

Net interest income 1,069 1,079

Business income 311 266

Additional gains, valuation and other items 31 (123)

Total income 1,411 1,222

Operating expenses (903) (872)

Levies and Regulatory charges (73) (70)

Impairment of goodwill – (9)

Operating profit pre-impairment 435 271

Net Impairment gains / (charges) (79) (937)

Share of associates / JVs 20 (3)

Underlying profit / (loss) before tax 376 (669)

Non-core items (61) (153)

Profit before tax 315 (822)

H1 2019(€m)

H1 2020(€m)

Net interest margin (NIM) 2.16% 2.02%

Cost income ratio1 65% 66%

Underlying earnings per share 25.2c (58.8c)

1 See slide 53 for calculation


18

NIM movement

FY 2019 Structural hedgeLiquid asset growth

UK competitive pressures

H1 2020

2.14%

2.02%

(6bps)

(4bps)

(2bps)

€1,069m €1,081m €1,079m

Net interest income1 / NIM

285bps

(17bps) (21bps)

280bps 278bps

(24bps)

H1 2019 H2 2019 H1 2020

Loan asset spread2 Liquid asset spread2

Stable net interest income

Stable net interest income / NIM 2.02%

• Net interest income benefitting from loan book growth since 2017 and reduced liability costs offsetting lower structural hedge income and UK competitive pressures

• NIM 2.02% is 12bps lower than FY 2019 reflecting:

– Growth in liquid assets

– Impact of low rate environment on structural hedge

– Competitive pressure in the UK mortgage market

– Strong commercial pricing discipline

• Q2 exit NIM 1.97%

Outlook

• FY 2020 NIM to be c.1.95% primarily reflecting:

– Lower new lending volumes

– Growth in liquid assets

– Impact of low rate environment on structural hedge

• Net interest income in 2020 to be c.5% lower than 2019

1 Excludes IFRS income classifications which are included in NIM calculation2 Spread = Loan asset yield or Liquid asset (excl. NAMA bonds) yield less Group’s average cost of funds


19

Net lending growth of €0.2bn

Net lending growth of €0.2bn in H1 2020• New lending €5.8bn decreased by 19% vs. H1 20191: – Retail Ireland new lending €2.3bn, (14%) vs. H1 2019 – Retail UK new lending €2.4bn, (18%) vs. H1 2019 – Corporate new lending €1.1bn, (30%) vs. H1 2019• Redemptions 7% higher vs. H1 2019 due to higher

Corporate redemptions in Q1 2020• RCF drawdown by Corporate customers in H1 2020 of

€1.3bn• Maintaining commercial discipline on risk and pricing

Reduced lending and economic activity in Q2 2020• Q2 2020 new lending2 48% lower than Q2 2019• Redemptions 7% lower than Q2 2019• Irish mortgage applications 28% lower in Q2 2020 vs.

Q2 2019• Q2 2020 UK mortgage applications 32% lower than prior

year

Outlook• Improving outlook and government measures supportive• 2020 gross new lending volumes expected to be c.70% of

2019 volumes

Group loan book movement

New lending2 and redemptions by quarter

€79.5bn€76.7bn

€5.8bn

€3.8bn €3.8bn€3.8bn

€2.0bn

Total €0.2bn net lending

(€0.9bn) (€2.1bn)

Q1 19 Q2 19Q1 20 Q2 20

Dec 19 Loan book

New Lending

Impairment

€1.3bn

RCF activity

(€6.9bn)

Redemptions FX / Other Jun 20 Loan book

€1.3bn €1.5bn€1.5bn

€0.8bn€1.1bn €1.0bn€0.8bn

€0.3bn€1.3bn €1.4bn€1.4bn

€0.9bn

n Retail Ireland n Corporate n Retail UK Redemptions

1 On a constant currency basis 2 Excluding revolving credit facilities

€3.2bn €3.3bn€3.9bn €3.1bn

48%


20

Lower business income from reduced economic activity

14% decrease in business income• 16% decrease in Wealth and Insurance: – New business sales (APE) decreased by 21% vs.

H1 2019 – Decrease in existing book income due to COVID-19

impact on returns and experience vs. 2019• Retail Ireland 20% lower vs. H1 2019: – Reduced economic activity driving lower current

account income – Decrease in FX income from reduced travel – Q2 card transactions 9% lower than Q1 2020• Retail UK €13m increase due to lower commissions paid• Corporate and Treasury income impacted by lower FX

income

Valuation and other items (€109m)• Falling equity markets and widening credit spreads

relating to unit linked assets and bond portfolio valuations in Wealth and Insurance (€90m)

• Financial instruments valuation adjustments and other items (€19m)

Outlook• Increased economic activity and accelerated reopening• 2020 business income to be 20%-30% lower than 2019

1 IFRS income classifications include c.€6m of interest income in H1 2020 on ‘Life loan mortgage products’ which on transition to IFRS 9 were mandatorily classified as FVTPL, with all income on such loans reported in ‘net other income’. IFRS income classifications are fully offset in net interest income

H1 2019(€m)

H1 2020(€m)

Wealth and Insurance 119 100

Retail Ireland 129 103

Retail UK (11) 2

Corporate and Treasury 77 67

Group Centre and other (3) (6)

Business Income 311 266

Additional Gains 3 2

IFRS income classifications1 10 (16)

Valuation and other items 18 (109)

Other Income 342 143

€144m€167m€152m

€114m

Q1 19 Q2 19Q1 20 Q2 20

32%

Business income by quarter


21

Strong cost discipline – €31m / 3% reduction

Strong cost discipline – €31m / 3% reduction• €31m / 3% net reduction after absorbing wage inflation

of 2.6%• Gross cost savings €47m: – Process efficiencies, organisational design and

sourcing strategically (€21m) – Change demand reduction and efficiencies driving

lower levels of investment spend and value for money savings (€26m)

• COVID-19 costs €12m, incremental expenditure managing response to the pandemic

Non-core items• €136m charge included in non-core related to

impairment of intangible assets: – Charge incurred on software assets, as no longer

expected to provide future economic benefits – No impact on capital ratios• €27m of charges related to business model restructuring

Outlook• 2020 costs to be lower than 2019• 2021 costs to be below previous guidance of €1.65bn

Non-core items H1 2019(€m)

H1 2020(€m)

Impairment on intangible assets – (136)Customer redress programme (62) (7)– Tracker Mortgage Examination (55) (7)– Other programme (7) –Cost of restructuring programme (27) (27)Investment return on treasury stock held for policyholders

1 17

Other 27 –Total non-core items (61) (153)

(€47m)

€12m €4m

€903m

€872m

H1 2019 COVID-19 costsCost initiatives Other costs H1 2020

Cost Movement


22

H1 2020 impairment charge €937m – prudent and comprehensive approach

IFRS 9 models macro-economic update

H1

2020

20

20 O

utlo

ok

Payment breaks Actual loan loss experience

1 See slide 44 for 2020-2024 macro-economic assumptions used in IFRS 9 models

• Updated IFRS 9 models incorporating impact of Forward Looking Information (FLI) from latest macro-economic outlook

• Central scenario1 assumes a deep downturn, gradual recovery and an orderly Brexit

• Reduced weighting towards upside scenario

• Will reflect mitigating impacts of government support schemes

• A change in the macro-economic outlook would lead to a change in lFRS 9 expected credit loss

While uncertainties remain, subject to no further deterioration in the economic environment or outlook, 2020 impairment charge expected to be in a range of c.€1.1bn to €1.3bn

• H1 2020 impairment charge incorporates risk of credit migration of customers on payment breaks

• Actual loss experience in H2 will reflect timing of loan migration to Stage 3 and final payment break outcomes

• Management adjustment to reflect increased risk related to:

– Estimated rates of migration from payment breaks to forbearance / arrears

– Assessment of mortgages, consumer loans, higher impacted sectors at risk from COVID-19 impact

• Actual loan loss experience on Stage 3 loans:

– Property and construction €179m, includes €166m related to legacy investment property exposures

– Non-property SME and corporate €115m

– Mortgage and consumer portfolios €27m

€432m €184m €321m


23

Impairment coverage increased to 2.7%

Impairment coverage increased to 2.7%

• Net impairment charge €888m1 / 222bps (H1 2019: 21bps) on loans and advances to customers

• Increased impairment charge driven by: – Change in macro-economic outlook due to COVID-19 – Estimated future credit migration related to payment

breaks – Actual loan loss experience (€0.3bn) primarily in

corporate and property portfolios, including €0.2bn on legacy property exposures

• 60% of impairment charge recognised on performing Stage 1 and Stage 2 loans

• ILA increased by €0.8bn to €2.1bn since Dec 2019, €0.5bn of increase on performing Stage 1 and Stage 2 loans

• Group impairment coverage increased from 1.6% to 2.7% at June 2020

Dec-19 Jun-20

ILA(€m)

ILA % of gross loans

ILA(€m)


Mortgages ROI 369 1.6% 448 2.0%Mortgages UK 63 0.3% 133 0.6%Non-property SME and corporate 487 2.4% 818 4.0%

Property and construction 230 2.8% 455 5.6%Consumer 159 2.8% 268 5.1%Total 1,308 1.6% 2,122 2.7%Stage 1 impairment coverage 0.2% 0.7%Stage 2 impairment coverage 3.4% 3.4%Stage 3 impairment coverage 31.5% 29.4%

€25m €37m€6m

€77m

€365m

€246m

€124m

€24m

(€11m)

€76m

Mortgages (ROI) Non-property SME and

corporate

Mortgages (UK) Property and construction

Consumer

Net impairment charge

Impairment loss allowance (ILA) by portfolio

1 Net impairment charge €888m on loans and advances to customers, net impairment charge on other financial instruments €49m, total net impairment charge €937m

n H1 2019 n H1 2020


24

Macro-economic outlook increasing Stage 2 balances

Macro-economic outlook increasing Stage 2 loans• €5.7bn increase in Stage 2 loans since Dec 2019

reflecting deteriorated macro-economic outlook: – Non-property SME and corporate portfolio Stage 2

loans increased €3.7bn – Property and construction Stage 2 loans increased

€1.9bn • Stage 3 loans of €4.4bn, increase of €1.3bn since

Dec 2019: – €0.9bn increase from implementation of new

Definition of Default; remainder from credit migration in corporate and property portfolios

• ILA increased by €0.8bn to €2.1bn since Dec 2019: – €0.5bn increase on performing loan books – €0.3bn increase in Stage 3 ILA from credit migration

in Non-property SME and corporate and Property and construction portfolios

Gross loans by stage

ILA movement

€71.8bn€62.7bn

€5.6bn€11.3bn

€80.5bn €78.5bn€0.1bn €0.1bn€3.1bn €4.4bn

€477m

€337m

Dec 19 Stage 31Stage 1 / 2 Jun 20

Dec 19 Jun 20

€1,308m

€2,122m


n Stage 1 n Stage 2 n Stage 3 n POCI

1.6% 2.7%

1 Includes Purchased Other Credit Impaired (POCI)


25

Residential mortgages

Residential mortgages

• Mortgage portfolios 57% of Group loan book

• ROI mortgage portfolio €22.9bn at June 2020: – Average LTV of 60% on stock – 81% of the portfolio has LTV <80%

• UK mortgage €21.5bn at June 2020: – Average LTV of 62% on stock – 82% of the portfolio has LTV <80%

• Implementation of new Definition of Default regulatory framework driving increase in stage 3 loans

• €149m impairment loss allowance increase largely on performing loans including management adjustment relating to payment breaks

• Impairment coverage increased from 0.9% to 1.3% at June 2020


ILA movement

€42.9bn€40.4bn

€1.7bn

€1.7bn

€46.3bn€44.3bn€1.7bn€2.2bn

€94m€55m


Dec 19 Jun 20

€432m

€581m


n Stage 1 n Stage 2 n Stage 3

0.9% 1.3%


26

Non-property SME and corporate

Non-property SME and corporate• Non-property SME and corporate portfolio well

diversified by geography and sector• Predominantly secured portfolios; government

measures providing additional support• €3.7bn increase in Stage 2 loans since Dec 2019

reflecting macro-economic outlook on higher impacted sectors:

– Wholesale and retail trade Stage 2 loans increased by €0.3bn to €0.6bn

– Accommodation and food service activities Stage 2 loans increased by €0.7bn to €0.9bn

– Acquisition Finance Stage 2 loans increased by €1.0bn to €1.3bn

• Increased impairment coverage across higher impacted sectors and portfolios:

– Wholesale and retail trade exposures €2.5bn, impairment coverage 5.0% (3.3% Dec 2019)

– Accommodation and food service activities exposures €1.7bn, impairment coverage 3.3% (1.6% Dec 2019)

– Acquisition Finance exposures €4.8bn, impairment coverage 3.5% (1.4% Dec 2019)

• €240m / 73% of increase in ILA related to performing Stage 1 and Stage 2 loans

• Impairment coverage increased from 2.4% to 4.0% at Jun 2020


ILA movement

€17.5bn€13.7bn

€2.2bn€5.9bn

€20.4bn €20.7bn€0.8bn €1.1bn

€240m€91m


Dec 19 Jun 20

€487m

€818m



2.4% 4.0%


27

Property and construction


• 10% of Group loan book; €7.4bn Investment Property; €0.8bn Development lending

• >40% Investment property exposures in Dublin; 30% UK exposures

• Investment Property exposures largely Retail (37%), Office (33%), Residential (19%) and Other (11%); 75% of the book LTV <70%

• Development lending portfolio comprises exposures to active development sites

• Deterioration in macro-economic outlook driving stage migration including forecast decrease in commercial property prices

• Legacy investment property exposures driving €179m increase in Stage 3 ILA



ILA movement

€6.0bn

€3.7bn

€1.5bn

€3.4bn

€8.1bn €8.2bn€0.6bn €1.1bn

€46m

€179m


Dec 19 Jun 20

€230m

€455m



2.8% 5.6%


28

Consumer

Consumer

• 7% of Group loan book; exit of UK Credit Cards in 2019

• €2.0bn Ireland consumer exposure; €0.8bn motor, €0.8bn consumer loans. €0.4bn credit cards

• €3.3bn UK consumer exposure; €2.1bn motor, €1.2bn consumer loans

• €109m impairment loss allowance increase largely on performing loans including management adjustment relating to payment breaks



ILA movement

€5.4bn€4.9bn

€0.2bn

€0.3bn

€5.7bn

€5.3bn€0.1bn

€0.1bn

€97m €12m


Dec 19 Jun 20

€159m

€268m



2.8% 5.1%


29

n Dec 19 n Jun 20

NPE ratio increase to 5.8%

Non-performing exposures

• NPE ratio increased by 140bps to 5.8%• €0.6bn inflows primarily from credit migration in

Non-property SME and corporate, and Property and construction portfolios

• Implementation of new Definition of Default regulatory framework increased NPEs by €0.5bn

• No NPE transactions completed in H1 2020 due to market conditions

• Group NPE coverage ratio increased by 10% to 47% at Jun 2020

Outlook

• Proven track record of working with customers to implement sustainable solutions; significantly below industry average for arrears management1

• NPE transactions dependent on market conditions

NPEs by portfolio

€0.9bn€1.1bn

€0.5bn€0.6bn

€0.1bn€0.1bn

€0.6bn€1.1bn

€1.5bn€1.6bn

Jun 20Coverage Ratio

Mortgages (ROI)


Non-property SME and corporate

Mortgages (UK)

Consumer (ROI & UK)

29%

42%

73%

21%

NPE movements

€5.0bn€3.5bn

€4.6bn

€0.6bn€0.5bn

Dec 18 Dec 19 Definition of Default

Jun 20Inflows

NPE ratio

6.3% 4.4% 5.8%

1 See slide 45


30

13.8%

(60bps)45bps

40bps

10bps40bps

(65bps)

(15bps)(15bps)

Loan Growth / RWA2

Dec 19 2019 DividendPre-impairment organic capital

generation1

Credit deterioration

Transformation investment

Definition of Default / IRB

models

SME supporting factor

Other / Pension Jun 20

Fully loaded CET1 ratio

Headroom to 2020 CET1 regulatory capital requirements

13.6%

Strong capital position

Strong capital position • Fully loaded CET1 ratio +10bps since Q1 2020• Regulatory CET1 ratio +50bps since Q1 2020• 2% reduction in RWA density

Outlook • 2020 regulatory CET1 ratio to remain above 13.5%• No dividend deduction assumed for 2020

1 Pre-impairment organic capital generation primarily consists of attributable profit excluding impairment and movements in regulatory deductions

2 Loan Growth / RWA movements from net loan growth, changes in asset quality and book mix and movements in other RWAs

RWAs€49.9bn

c.560bps headroom

RWAs€47.6bn

Impairment (190bps)EL offset 90bpsRWA reduction 35bpsNet impact (65bps)

(20bps)

Regulatory capital demand

13.6%

9.27%

14.9%

2020 Regulatory Requirements

(excl. P2G)

Jun-20 Fully Loaded CET1 Ratio

Jun-20 Regulatory CET1 Ratio


31

Outlook

Profitability

Longer term impacts of COVID-19 on the economy and the Group’s financial performance remain uncertain, our medium term targets should therefore no longer be considered current in these circumstances

• 2020 gross new lending volumes expected to be c.70% of 2019 volumes

• Net interest income in 2020 to be c.5% lower than 2019

• 2020 business income to be 20%-30% lower than 2019

• Costs will continue to reduce:

– 2020 costs to be lower than 2019

– 2021 costs to be below previous guidance of €1.65bn

Asset Quality

• While we expect economic recovery commencing in H2 2020, COVID-19 and Brexit are ongoing uncertainties

• Subject to no further deterioration in the economic environment or outlook, 2020 impairment charge expected to be in a range of c.€1.1bn to €1.3bn

Capital

• 2020 regulatory CET1 ratio to remain above 13.5%

• No dividend deduction assumed for 2020


32

Summary and conclusion

Trading outlook While uncertainties remain, accelerated economic activity is supporting improved outlook for 2020 lending and income vs. Q1 outlook

Asset quality Proven track record, over a sustained period, of working with customers to find sustainable solutions

Efficiency All tactical and strategic opportunities being captured to further reduce our cost base; 2021 costs to be below previous guidance of €1.65bn

Capital Strong capital position with fully loaded CET1 ratio of 13.6%, regulatory CET1 ratio 14.9%

Transformation Multi-year programme delivery against milestones; delivering agile, digitised solutions for customers and creating cost efficiencies

UK retail Further restructuring required to improve returns; strategic review of Northern Ireland retail business recently commenced


34

Appendix


35

Appendix Slide No.• BOI overview – customer loans / new lending volumes 36• ROI mortgage loan book 37• Income Statement – Net interest income analysis 38 – Structural hedge 39 – Interest rate sensitivity 40• Asset Quality – Non-performing exposures by portfolio 41 – Portfolio by stage 42 – Non-property SME and corporate by stage 43 – Forward Looking Information – macro-economic scenarios 44 – ROI Mortgages 45 – UK customer loans 46• Ordinary shareholders’ equity and TNAV 47• Capital – Capital and liquidity 48 – CET1 ratios 49 – Regulatory capital requirements 50 – Risk weighted assets 51• Transformation investment / operating expenses 52• Cost income ratio: Jun 2020 53• Defined Benefit Pension Schemes 54• Forward-Looking statement 55• Contact details 56


36

BOI Overview

1 Based on geographic location of customer 2 Excludes revolving credit facilities

Composition (Jun 20) ROI(€bn)

UK(€bn)

RoW(€bn)

Total(€bn)

Total(%)

Mortgages 22.9 21.4 0.0 44.4 57%Non-property SME and corporate 10.8 5.1 4.7 20.6 26% SME 7.1 1.6 0.0 8.7 11% Corporate 3.7 3.5 4.7 11.9 15%Property and construction 5.3 1.9 1.0 8.2 10% Investment 4.7 1.7 1.0 7.4 9% Development 0.6 0.2 0.0 0.8 1%Consumer 2.0 3.3 0.0 5.3 7%Customer loans (gross) 41.1 31.7 5.7 78.5 100%Geographic (%) 53% 40% 7% 100%

€1.2bn

€2.3bn

€0.9bn

€0.2bn €0.5bn

€0.2bn

€0.6bn

€0.6bn

€0.4bn

€2.1bn

€1.1bn2

Corporate Banking

H1 2020H1 2019 H1 2020H1 2019 H1 2019 H1 2020

£2.5bn

Retail UK

£1.3bn

£1.2bn

£0.2bn

£1.1bn £0.7bn€0.7bn

€0.3bn

Retail Ireland€2.7bn

€1.0bn

€1.5bn

n Mortgages n Consumer n Business Banking n Property n Corporate Ireland n Acquisition Finance n Corporate UK

£2.1bn

€0.3bn

Gross new lending volumes

Profile of customer loans1 at Jun 20 (Gross)

€0.1bn£0.1bn


37

ROI Mortgages: €22.9bn

New Lending volumes and Market Share

LTV profile• Average LTV of 60% on mortgage stock at Jun 2020

(Dec 19: 59%)• Average LTV of 76% on new mortgages in H1 2020 (2019:

74%)Tracker mortgages• €7.9bn or 95% of trackers at Jun 2020 are on a capital

and interest repayment basis• 82% of trackers are Owner Occupier mortgages; 18% of

trackers are Buy to Let mortgages• Loan asset spread on ECB tracker mortgages was

c.72bps1 in H1 2020

Pricing strategy• Fixed rate led mortgage pricing strategy which provides

value, certainty and stability to our customers and to the Group

• Fixed rate products accounted for c.94% of our new lending in H1 2020, up from c.30% in 2014

Distribution strategy – continued expansion into broker channel• Establishing a large network of active brokers at a

national level; brokers accounted for 30% of the market in H1 2020

Wider proposition• 7 in 10 ROI customers who take out a new mortgage take

out a life assurance policy through BOI Group• 3 in 10 ROI customers who take out a new mortgage take

out a general insurance policy through BOI Group with insurance partners

ROI Mortgages (gross)€23.7bn €23.0bn €22.9bn

n Tracker n Variable Rates n Fixed Rates

€9.8bn

€4.4bn

€9.5bn €11.1bn €11.6bn

€3.2bn €3.0bn

€8.7bn €8.3bn

n New Lending Volumes Market Share

€1.0bn €1.3bn€0.9bn

1 Average customer pay rate of 111bps less Group average cost of funds of 39bps

Dec 18 Dec 19H2 2019 H1 2020H1 2019 Jun 20

25%23% 24%


38

H2 2018 H1 2019 H2 2019 H1 2020Average Volumes

(€bn)

Gross Interest

(€m)

Gross Rate(%)

Average Volumes

(€bn)

Gross Interest

(€m)

Gross Rate(%)

Average Volumes

(€bn)

Gross Interest

(€m)

Gross Rate(%)

Average Volumes

(€bn)

Gross Interest

(€m)

Gross Rate(%)

Ireland Loans1

UK LoansC&T Total Loans and Advances to CustomersLiquid AssetsNAMA Sub DebtTotal Liquid Assets

34.427.614.676.622.70.1

22.8

595391294

1,280382

40

3.43%2.82%3.98%3.31%0.33%5.24%0.35%

34.227.515.877.522.90.1

23.0

582377314

1,273332

35

3.43%2.76%3.99%3.31%0.29%5.40%0.31%

33.728.016.878.523.90.1

24.0

583375330

1,288302

32

3.43%2.66%3.90%3.26%0.25%5.26%0.27%

33.428.517.479.326.60.0

26.6

561356324

1,241161

17

3.38%2.52%3.74%3.15%0.12%5.22%0.13%

Total Interest Earning Assets 99.4 1,320 2.63% 100.5 1,308 2.62% 102.5 1,320 2.56% 105.9 1,258 2.36%Ireland DepositsCredit Balances2

UK DepositsC&T DepositsTotal DepositsWholesale Funding3

Subordinated Liabilities

20.732.818.64.9

77.011.02.1

(8)3

(88)(9)

(102)(52)(51)

(0.08%)0.02%

(0.94%)(0.37%)(0.26%)(0.94%)(4.86%)

20.734.518.35.1

78.610.32.0

(7)3

(91)(9)

(104)(54)(49)

(0.07%)0.02%

(1.00%)(0.35%)(0.27%)(1.06%)(4.85%)

21.036.618.65.0

81.29.91.5

(5)6

(103)(9)

(111)(62)(41)

(0.05%)0.03%

(1.09%)(0.34%)(0.27%)(1.24%)(5.44%)

21.339.618.74.7

84.29.71.5

(2)8

(90)(4)

(88)(55)(34)

(0.02%)0.04%

(0.97%)(0.16%)(0.21%)(1.13%)(4.61%)

Total Interest Bearing Liabilities 90.1 (205) (0.45%) 90.9 (207) (0.46%) 92.6 (214) (0.46%) 95.4 (177) (0.37%)Other4 (30) (22) (18) (18)

Net Interest Margin as reported 99.4 1,085 2.17% 100.5 1,079 2.16% 102.5 1,088 2.11% 105.9 1,063 2.02%Average ECB Base rateAverage 3 month EuriborAverage BOE Base rateAverage 3 month LIBOR

0.00%(0.32%)0.70%0.82%

0.00%(0.31%)0.75%0.84%

0.00%(0.40%)0.75%0.78%

0.00%(0.31%)0.36%0.35%

Income StatementNet interest income analysis

1 Includes average interest earning assets of c.€0.3bn in 2020 carried at FVTPL with associated FY20 interest income of c.€6m 2 Credit balances in H1 2020: ROI €31.1bn, UK €3.8bn, C&T €4.7bn 3 Includes impact of credit risk transfer transactions executed in Dec 2016, Nov 2017 and Dec 2019 4 Includes IFRS 16 lease expense, interest on certain FVPTL items and adjustments that are of a non-recurring nature such as customer

termination fees and EIR adjustments


39

EUR structural hedge

Jan-17Jul-16 Jul-17 Jan-18 Jul-18 Jul-19 Jun-20Jan-19 Jan-20

51bps

-0.5%

0.0%

0.5%

1.0%

1.5%

Structural Hedge

Interest income on structural hedge1

€34m €34m

€51m€34m

€85m

Average structural hedge volume

€68m

H1 2019 H1 2020

n EUR n GBP

Overview• Structural hedging is used to help mitigate volatility in

earnings from interest rate movements• Income from structural hedging has supported interest

income as market rates have declined• Average structural hedge volume in H1 2020 of €35.8bn

(EUR 84%, GBP 16%): – c.75% of equity and credit balances hedged – Weighted average life of hedges is c.3.5 years• c.15% of existing hedges are re-hedged annually • Hedging of incremental growth in credit balances paused in

H1 2020• Interest income of €68m from structural hedge in H1 2020;

c.6% of Group’s net interest income (c.8% in 2019)• Impact of lower interest rate environment incorporated in

net interest income and NIM 2020 guidance

€32.7bn €35.8bn

1 Gross interest income from fixed leg of hedging swap

EUR structural hedge yield External EUR 7yr swap rate


40

Interest Rate Sensitivity

The table below shows the estimated sensitivity of the Group’s income (before tax) to an instantaneous and sustained 1% parallel movement in interest rates

The above sensitivities are based on certain simplifying assumptions such as:• the assumption of a static balance sheet by size and composition;• assets and liabilities whose pricing is mechanically linked to market / central bank rates are assumed to reprice accordingly;

and• the sensitivities should not be considered a forecast of future performance in these rate scenarios as they do not capture

potential management action in response to unexpected changes in the interest rate environment.

Estimated sensitivity on Group income (1 year horizon) Dec 19 (€m)

Jun 20 (€m)

100bps higher

100bps lower

c.210

(c.250)

c.250

(c.270)


41

Composition (Jun 20) Advances(€bn)


(€bn)

Non-performing exposures as %

of advances

Impairment loss allowance

(€bn)

Impairment loss allowance as % of

non-performing exposuresResidential Mortgages – Republic of Ireland– UKNon-property SME and corporate– Republic of Ireland SME– UK SME– CorporateProperty and construction– Investment– DevelopmentConsumer

44.422.921.420.77.11.7

11.98.27.40.85.3

2.21.60.61.10.60.10.41.11.10.00.1

5.0%6.9%3.0%5.4%9.1%6.8%3.1%

13.3%14.4%4.0%2.4%

0.60.40.10.80.40.10.30.50.40.00.3

26%29%21%73%66%57%89%42%39%

118%208%

Total loans and advances to customers 78.5 4.6 5.8% 2.1 47%

Composition (Dec 19) Advances(€bn)


(€bn)

Non-performing exposures as %

of advances

Impairment loss allowance

(€bn)

Impairment loss allowance as % of

non-performing exposuresResidential Mortgages – Republic of Ireland– UKNon-property SME and corporate– Republic of Ireland SME– UK SME– CorporateProperty and construction– Investment– DevelopmentConsumer

46.323.023.220.47.31.7

11.48.17.20.95.7

1.91.50.50.90.50.10.20.60.60.00.1

4.2%6.3%2.1%4.3%7.5%6.3%2.0%7.3%7.7%3.8%1.7%

0.40.40.10.50.30.00.10.20.20.00.2

22%25%13%55%54%46%60%39%37%64%

159%Total loans and advances to customers 80.5 3.5 4.4% 1.3 37%

Non-performing exposures by portfolio


42

Portfolio by stageComposition (Jun 20) Gross carrying amount

(before impairment loss allowance) Impairment loss allowance ILA % of gross

loansSectoral analysis by stage Stage 1 €m

Stage 2 €m

Stage 3 €m

POCI €m

Total €m

Stage 1 €m

Stage 2 €m

Stage 3 €m

POCI €m

Total €m

Residential Mortgages– Republic of Ireland– UKNon-property SME and corporate– Republic of Ireland SME– UK SME– CorporateProperty and construction– Investment– DevelopmentConsumer– Motor Lending UK– Loans UK– Motor Lending ROI– Loans ROI– Credit Cards ROI

40,43520,10620,32913,6865,3441,0747,2683,6843,470214

4,9051,9541,216767600368

1,6801,209471

5,8991,128497

4,2743,4262,8345922658341–

10734

2,1991,565634

1,047636106305

1,02799334

1282236213316

33–

27–1

266060––––––

44,31722,88321,43420,6597,1081,678

11,8738,1977,357840

5,2982,0591,293788740418

1055055

154108

64012111

15113

1066

197

412219

2206822

130825824428

17–

107

43537659

43725137

149345330157510308

189

–––7––7

1616–––––––

58144813381842765

32645541540

26831

153144723

1.3%2.0%0.6%4.0%6.0%3.9%2.7%5.6%5.6%4.8%5.1%1.5%

11.8%1.8%6.4%5.5%

Total 62,710 11,270 4,401 90 78,471 422 385 1,292 23 2,122 2.7%

Composition (Dec 19) Gross carrying amount(before impairment loss allowance) Impairment loss allowance ILA %

of gross loansSectoral analysis by stage Stage 1

€mStage 2

€mStage 3

€mPOCI €m

Total €m

Stage 1 €m

Stage 2 €m

Stage 3 €m

POCI €m

Total €m

Residential Mortgages– Republic of Ireland– UKNon-property SME and corporate– Republic of Ireland SME– UK SME– CorporateProperty and construction– Investment– DevelopmentConsumer– Motor Lending UK– Loans UK– Motor Lending ROI– Loans ROI– Credit Cards ROI

42,89820,61022,28817,4745,7991,382

10,2935,9855,418567

5,4212,1471,232821681540

1,6771,133544

2,1751,011225939

1,5131,2512622065840–

7434

1,6931,28940475749578

18454951930

1002124143011

33–

27–2

256565––––––

46,27123,03523,23620,4337,3051,687

11,4418,1127,253859

5,7272,2261,296835785585

1679

56333

20651

646

42394

36221478398

3142402

323

17–66

38034040

3532253890

180162186310216

197

–––––––22–––––––

43236963

48729749

14123020921

15919809

3417

0.9%1.6%0.3%2.4%4.1%2.9%1.2%2.8%2.9%2.4%2.8%0.9%6.2%1.1%4.3%2.9%

Total 71,778 5,571 3,099 95 80,543 142 188 976 2 1,308 1.6%


43

Non-property SME and corporate by stage1,2

1 The Non-property SME and corporate portfolio is analysed by NACE code. The NACE code classification system is a pan-European classification system that groups organisations according to their business activities.

2 Exposures to NACE codes totaling less than €400 million are grouped together as 'Other sectors'. The NACE codes reported in the table above can therefore differ period on period.

Composition (Jun 20) Gross carrying amount(before impairment loss allowance) Impairment loss allowance ILA %


€mStage 2

€mStage 3

€mPOCI €m

Total €m

Stage 1 €m

Stage 2 €m

Stage 3 €m

POCI €m

Total €m

Non-property SME and corporate– Manufacturing– Wholesale and retail trade– Administrative and support service activities– Accommodation and food service activities– Agriculture, forestry and fishing– Human health services and social work activities– Transport and storage– Other services– Professional, scientific and technical activities– Arts, entertainment and recreation– Financial and insurance activities– Real estate activities– Education– Other sectors

3,0131,7231,705783

1,347766675615462308535397374983

1,30556956288920262036722117630651

11871

442

11714795

1051196871

145143124731

37

–1

26–––––––––––

4,4352,4402,3881,7771,6681,4541,113981652645610588446

1,462

24232312171165624

1038

462117149

421297

18244

15

45795333293445556

118

28–

11

––7–––––––––––

1151231005955876369193114427

34

2.6%5.0%4.2%3.3%3.3%6.0%5.7%7.0%2.9%4.8%2.3%7.1%1.6%2.3%

Total 13,686 5,899 1,047 27 20,659 154 220 437 7 818 4.0%

Composition (Dec 19) Gross carrying amount(before impairment loss allowance) Impairment loss allowance ILA %


€mStage 2

€mStage 3

€mPOCI €m

Total €m

Stage 1 €m

Stage 2 €m

Stage 3 €m

POCI €m

Total €m

Non-property SME and corporate– Manufacturing– Wholesale and retail trade– Administrative and support service activities– Agriculture, forestry and fishing– Accommodation and food service activities– Human health services and social work activities– Transport and storage– Other services– Financial and insurance activities– Professional, scientific and technical activities– Real estate activities– Arts, entertainment and recreation– Education– Electricity, gas, steam and air conditioning supply– Other sectors

3,9632,0311,9871,5231,4761,018902778662597435364426363949

35632714212719341413798146790628

38102

991296794493046

123199

601813

10

–1

251–––––––––– –

4,4182,4882,2211,7451,7181,4621,085999695673585444435404

1,061

1087734321231113

1110556

1557–353–12

416339291922345165

277127

–––––––––––––– –

62815141284142607

10351124

12

1.4%3.3%2.3%2.3%1.6%2.8%3.9%6.0%1.0%1.5%6.0%2.5%0.5%1.0%1.1%

Total 17,474 2,175 757 27 20,433 56 78 353 – 487 2.4%


44

Forward Looking Information – macro-economic scenarios

30 June 2020Republic of Ireland United Kingdom

2020 2021 2022-2024 2020 2021 2022-2024

Downside – 30% scenario probability weighting GDP growth1

GNP growth1

Unemployment rate2

Residential property price growth3

Commercial property price growth3

Central – 50% scenario probability weighting GDP growth1

GNP growth1

Unemployment rate2



Upside – 20% scenario probability weighting GDP growth1

GNP growth1

Unemployment rate2



(12.0%)(14.0%)14.8%

(10.0%)(14.0%)

(8.3%)(11.6%)13.0%

(10.0%)(14.0%)

(5.0%)(7.0%)9.8%

(7.0%)(10.5%)

5.7%6.9%

10.9%(5.0%)(9.0%)

6.1%7.3%8.2%

(1.0%)(2.0%)

8.5%9.7%6.2%1.0%0.0%

2.5%2.1%7.5%

(0.7%)(0.3%)

2.7%2.3%4.8%1.0%0.7%

2.9%2.5%4.5%1.7%1.8%

(13.0%)n/a

9.5%(10.0%)(15.0%)

(9.3%)n/a

7.3%(10.0%)(15.0%)

(6.0%)n/a

6.3%(7.0%)

(11.5%)

7.9%n/a

7.9%(5.0%)(9.0%)

8.8%n/a

6.0%(2.0%)(3.0%)

10.7%n/a

4.2%(1.0%)(0.5%)

1.6%n/a

6.3%(0.7%)(0.3%)

1.8%n/a

4.5%1.0%1.0%

2.2%n/a

4.0%2.0%1.8%

1 Annual growth rate2 Average yearly rate3 Year-end figures


45

>90 days arrears• Bank of Ireland is significantly below the industry

average for both Owner Occupier (29% of industry average) and Buy to Let (24% of industry average)

>720 days arrears• Bank of Ireland is significantly below the industry

average for both Owner Occupier (23% of industry average) and Buy to Let (17% of industry average)

ROI MortgagesContinued proactive arrears management

Owner Occupier Buy to letOwner Occupier Buy to let

Industry Average

4.3%

Industry Average

12.1%

1.0% 2.1%

>720 days arrears1

>90 days arrears1

Owner Occupier Buy to letOwner Occupier Buy to let

Industry Average

6.5%

Industry Average

15.7%

1.9%3.8%

1 As at March 2020, based on number of accounts, industry average excluding BOI


46

UK Customer Loans £29.1bn (€31.7bn)

UK Mortgages Analysis – £19.6bn• Total UK mortgages of £19.6bn; (NPEs: 3.1%): – Average LTV of 62% on existing stock at Jun 2020 (Dec 19: 63%) – Average LTV of 71% on new UK mortgages in H1 2020 (2019:

73%)• 68% of the current mortgage portfolio originated since January

2010 are standard owner occupier mortgages• BTL book is well seasoned with 62% of these mortgages

originated prior to January 2010• Average balance of Greater London mortgages is c.£194k, with

91% of Greater London mortgages having an indexed LTV <70%

Other UK Customer Loans Analysis – £9.5bn• Non-performing exposures of £0.8bn with strong coverage ratios• Performing loans of £8.7bn: – SME: broad sectoral diversification with low concentration risk – Corporate: specialist lending teams in Acquisition Finance and

Corporate lending through a focused sector strategy – Investment Property: primarily retail, office and residential

sectors – Consumer (£3.1bn): – Northridge (£1.9bn): Asset backed motor finance business;

net loan book stable in H1 2020; mid-market targeting prime business only; below industry arrears and loan losses

– Personal loan volumes (£1.2bn): net loan book increase of £0.1bn in H1 2020n Performing loans n Non-performing exposures

Other UK Customer Loans – £9.5bn

UK Mortgages – £19.6bn

n Scotland £1.2bn

n South East £2.0bn

n Rest of England£9.1bn

n Wales £0.8bn

n Northern Ireland£1.1bn

n Outer Metropolitan

£2.1bn

n Greater London £3.3bn

SME Investment Property

Corporate Land & Development

Consumer

£1.3bn£1.0bn

£0.2bn

£3.1bn£0.1bn £3.0bn

£0.1bn

£0.5bn

£0.1bn


47

Ordinary shareholders’ equity and TNAV

Movement in ordinary shareholders’ equity 2019(€m)

H1 2020(€m)

Ordinary shareholders’ equity at beginning of period 9,243 9,625Movements:Profit attributable to shareholdersDividend paid to ordinary shareholdersDistribution on other equity instruments – additional tier 1 coupon (net of tax)Re-measurement of the net defined benefit pension liability Debt instruments at FVOCI reserve movementsCash flow hedge reserve movementForeign exchange movementsOther movements

448(173)

–3926(5)

132(85)

(726)–

(31)562(40)11

(168)(2)

Ordinary shareholders’ equity at end of period 9,625 9,231

Tangible net asset value 2019(€m)

Jun 20(€m)

Ordinary shareholders’ equity at the end of period 9,625 9,231Adjustments:Intangible assets and goodwillOwn stock held for benefit of life assurance policyholders

(838)30

(720)35

Tangible net asset value (TNAV) 8,817 8,546Number of ordinary shares in issue at the end of the period excluding treasury shares 1,074 1,072TNAV per share (€) €8.21 €7.97


48

Capital and liquidity

Liquidity• Funding and liquidity remains strong from stable

customer deposits and MREL issuance

Customer deposits: €86.5bn• Growth of €2.5bn principally due to higher current

account credit balances predominantly from the impact of COVID-19 restrictions and lower consumer spending

Wholesale funding: €9.5bn• AT1 and senior debt issuance of c.€0.75bn during H1

2020• MREL ratio of 24.4% based on RWA at Jun 2020

Leverage Ratio• Fully Loaded Leverage Ratio: 6.3%• Regulatory Leverage Ratio: 6.8%

Tangible Net Asset Value• TNAV decreased to €7.97

Dec 2019(€bn)

Jun 2020(€bn)

Customer loans 79 77

Liquid assets 27 29Other assets 26 26

Total assets 132 132

Customer deposits 84 87

Wholesale funding 11 10

Shareholders’ equity 10 9

Other liabilities 27 26

Total liabilities 132 132

TNAV per share €8.21 €7.97

Closing EUR / GBP FX rates 0.85 0.91

Dec 2019 Jun 2020

Liquidity Coverage Ratio 138% 149%

Net Stable Funding Ratio 131% 135%Loan to Deposit Ratio 95% 89%


49

Phasing impacts on Regulatory ratio• Deferred tax assets – certain DTAs1 are deducted at a rate of 60% for 2020, increasing annually at a rate of 10% thereafter

until 2024• IFRS 92 – the Group has elected to apply the transitional arrangement. The transitional arrangement allows a 100% add-back

in 2020 and 2021, decreasing to 75%, 50%, and 25% in subsequent years

Capital – strong fully loaded and regulatory CET1 ratiosCapital ratios – Jun 2020

Regulatory ratio(€bn)

Fully loaded ratio(€bn)

Total equityLess Additional Tier 1Deferred taxIntangible assets and goodwillForeseeable dividendExpected loss deductionPension Fund AssetIFRS 9 Regulatory AddbackOther items

9.9(0.7)(0.7)(0.6)

–(0.3)(0.6)0.4

(0.2)

10.0(0.7)(1.2)(0.6)

–(0.2)(0.6)

–(0.3)

Common Equity Tier 1 Capital 7.1 6.5Credit RWAOperational RWAMarket, Counterparty Credit Risk and Securitisations

41.84.41.7

41.54.41.7

Total RWA 47.9 47.6

Common Equity Tier 1 ratio 14.9% 13.6%

Total Capital Ratio 18.7% 17.4%

Leverage ratio 6.8% 6.3%

1 Deferred tax assets due to temporary differences are included in other RWA with a 250% risk weighting applied2 The IFRS 9 addback to the Regulatory CET1 was c.70bps at 30 Jun 2020, increased from c.15bps at 31 Dec 2019


50

Regulatory Capital Requirements

Regulatory Capital Requirements• The Group’s 2020 regulatory CET1 requirement, excluding P2G, has reduced by 218bps, from 11.45% to 9.27%: – Pillar 2 Requirement (P2R): ECB announced change in composition of P2R of 2.25%, which reduced the Group’s CET1

P2R by 98bps to 1.27% – Countercyclical Buffer (CCyB): the Financial Policy Committee UK (FPC) and the Central Bank of Ireland reduced the

UK and ROI CCyB rates to 0% until at least Q1 2022, which reduced the Group’s CCyB by c.120bps • CET1 headroom of c.560bps to Dec 2020 regulatory capital requirements of 9.27%• Regulatory total capital ratio of 18.7% provides headroom of c.495bps above total capital requirement of 13.75%

pending further AT1 / Tier 2 issuance to meet increased Tier 1 / Tier 2 requirements following P2R composition change

Pro forma CET1 Regulatory Capital Requirements 2019 2020 2021

Pillar 1 – CET1Pillar 2 Requirement (P2R) Capital Conservation Buffer (CCB)ROI Countercyclical buffer (CCyB)UK Countercyclical buffer (CCyB)O-SII Buffer (phase in July each year)Systemic Risk Buffer – Ireland

4.50%2.25%2.50%0.60%0.30%0.50%

–

4.50%1.27%2.50%0.00%0.00%1.00%

–

4.50%1.27%2.50%0.00%0.00%1.50%

–

Pro forma Minimum CET1 Regulatory Requirements 10.65% 9.27% 9.77%

Pillar 2 Guidance (P2G) Not disclosed in line with regulatory preference


51

Risk Weighted Assets (RWAs) / Leverage Ratio

Customer lending average credit risk weights – Jun 20201, 2

(Based on regulatory exposure class)

• IRB approach accounts for: – 67% of credit EAD (Dec 19: 69%) – 72% of credit RWA (Dec 19: 73%)• Regulatory RWA has decreased from €50.1bn at Dec

2019 to €47.9bn at Jun 2020. The decrease is primarily due to net loan book growth being more than offset by application of revised SME supporting factor rules, reduction in RWA due to changes in asset quality and mix and FX movements

Leverage Ratio• Fully Loaded Leverage Ratio: 6.3%• Regulatory Leverage Ratio: 6.8%

EAD3

(€bn)RWA(€bn)

Avg. Risk Weight

ROI MortgagesUK MortgagesSMECorporateOther Retail

23.422.017.010.55.9

6.44.1

11.710.34.2

27%19%69%98%71%

Customer lending credit risk 78.8 36.7 47%

EBA Transparency Exercise 2019Country by Country Average IRB risk weightsResidential Mortgages – Jun 2019

EBA Risk Dashboard Q2 2019Country by Country Average Leverage ratioRegulatory Leverage Ratio – Jun 2019

SwedenGermany

Netherlands Denmark

United KingdomFrance

SpainFinland

ItalyBelgiumNorwayAustria

PortugalIreland

1 EAD and RWA include both IRB and Standardised approaches and comprise both non-defaulted and defaulted loans2 Securitised exposures are excluded from the table (i.e. excludes exposures included in CRT executed in Nov 2017 and Dec 2019)3 Exposure at default (EAD) is a regulatory estimate of credit risk exposure consisting of both on balance exposures and off balance

sheet commitments

10.1%7.6%

7.0%7.0%

6.2%5.8%

5.6%5.6%

5.1%5.1%

4.6%4.6%4.5%4.4%

SwedenBelgium

United KingdomAustriaFrance

NetherlandsGermany

SpainDenmark

FinlandPortugal

ItalyNorwayIreland

4.2%10.1%10.2%10.7%10.9%11.0%

14.3%14.4%14.6%

15.8%18.0%18.9%

20.9%35.0%


52

Average of €275m p.a.

€306m €263m

€195m

€105m

Transformation Investment: €1.4bn (2016-2021)

2016 2017 2018 2019 2020 2021

Transformation Investment / Operating expenses

Transformation Investment

• Average annual investment of €275m from 2018-2021; equates to CET1 capital of c.50-60bps

• Investment of €109m in H1 2020 split across the income statement (26%), balance sheet (49%) and non-core items (25%)

• Total transformation investment of €1.4bn 2016-2021 unchanged

Operating Expenses H1 2019(€m)

H1 2020(€m)

Total staff costs 414 425– Staff costs 350 361– Pension costs 64 64Other costs 277 288Depreciation 149 131Operating Expenses 840 844Transformation Investment charge 63 28Operating Expenses (before levies and regulatory charges) 903 872

Levies and Regulatory charges 73 70Total Operating Expenses 976 942Average staff numbers 10,368 10,383Cost income ratio1 65% 66%

1 See slide 53 for additional detail


53

Cost income ratio: Jun 2020Headline vs. Adjusted

H1 2020Headline

(€m)

Pro forma adjustments

(€m)

H1 2020 Pro forma

(€m)Net interest income 1,079 – 1,079

Other income– Business income– Additional gains– Other valuation items1

2662

(125)

–(2)

109

266–

(16)

Total Income 1,222 107 1,329

Costs– Operating expenses– Transformation Investment

84428

––

84428

Costs 872 – 872

Cost income ratio 71% 66%

• Cost income ratio excludes: – Levies and Regulatory charges – Non-core items

• H1 2020 adjusted cost income ratio is adjusted for: – Additional gains and valuation items1 €107m

1 Excludes IFRS income classifications which is fully offset in net interest income


54

Defined Benefit Pension Schemes

• IAS19 Pension surplus of €0.53bn at Jun 2020 (€0.14bn deficit Dec 2019). Schemes in deficit €0.18bn, schemes in surplus €0.71bn

• Discount rates increased from year end – a significant fall in risk free interest rates was more than offset by a rise in credit spreads

• The interest rate hedging in the investment portfolios largely compensated for the impact of the reduction in risk free rates, and widening credit spreads resulted in an overall improvement in the balance sheet position

• Long term inflation assumptions have also decreased in the period with the reduction in liabilities partially offset by the reduction in inflation hedging assets

• De-risking strategies in recent years have also reduced the schemes’ sensitivity to global equity movements. Listed equity asset holdings have been reduced in favour of increases in Diversified assets and Credit / LDI / Hedging allocations

Group IAS19 Defined Benefit Pension (Deficit) / Surplus Total Group Defined Benefit Pension Scheme Assets (%)

n IAS19 DB Pension (Deficit) / Surplus EUR Discount Rate n Listed equities n Diversified assets1 n Credit / LDI / Hedging

1Diversified assets includes infrastructure, private equity, hedge funds and property

(€0.48bn)

€7.2bn €7.2bn

(€0.23bn)

€8.4bn €8.5bn

(€0.14bn)

€0.53bn

Jun 16 Dec 17 Dec 18 Dec 19 Jun 20 Jun 16 Dec 17 Dec 18 Dec 19 Jun 20

(€1.19bn)

€7.1bn

25% 24%12% 12% 11%

17%

58% 55% 65% 65% 68%

1.60%

2.10%2.00%

1.30%1.45%

IAS19 Pension Deficit Sensitivities(Jun 2016 / Dec 2017 / Dec 2018 / Dec 2019 / Jun 2020)

Interest Rates1 Credit Spreads2 Inflation3 Global Equity4

1 Sensitivity of Group deficit to a 0.25% decrease in interest rates2 Sensitivity of IAS19 liabilities to a 0.10% decrease in credit spread over risk free rates3 Sensitivity of Group deficit to a 0.10% increase in long term inflation4 Sensitivity of deficit to a 5% decrease in global equity markets with allowance for other

correlated diversified asset classes

€313m

€173m €162m €153m€181m €166m

€118m €102m €109m €33m€71m

€19m€38m€28m €28m

€122m€128m€90m €102m€118m

21%23% 23% 21%


55

Forward – Looking statement

This document contains forward-looking statements with respect to certain of the Bank of Ireland Group plc (the ‘Company’ or ‘BOIG plc’) and its subsidiaries’ (collectively the ‘Group’ or ‘BOIG plc Group’) plans and its current goals and expectations relating to its future financial condition and performance, the markets in which it operates and its future capital requirements. These forward-looking statements often can be identified by the fact that they do not relate only to historical or current facts. Generally, but not always, words such as ‘may,’ ‘could,’ ‘should,’ ‘will,’ ‘expect,’ ‘intend,’ ‘estimate,’ ‘anticipate,’ ‘assume,’ ‘believe,’ ‘plan,’ ‘seek,’ ‘continue,’ ‘target,’ ‘goal,’ ‘would,’ or their negative variations or similar expressions identify forward-looking statements, but their absence does not mean that a statement is not forward-looking.

Examples of forward-looking statements include, among others: statements regarding the Group’s near term and longer term future capital requirements and ratios, level of ownership by the Irish Government, loan to deposit ratios, expected impairment charges, the level of the Group’s assets, the Group’s financial position, future income, business strategy, projected costs, margins, future payment of dividends, the implementation of changes in respect of certain of the Group’s pension schemes, estimates of capital expenditures, discussions with Irish, United Kingdom, European and other regulators and plans and objectives for future operations. Such forward-looking statements are inherently subject to risks and uncertainties, and hence actual results may differ materially from those expressed or implied by such forward-looking statements.

Investors should read ‘Principal Risks and Uncertainties’ in the Group’s Interim Report for the 6 months ended 30 June 2020 beginning on page 28 and also the discussion on risk in the Group’s Annual Report for the year ended 31 December 2019.

Nothing in this document should be considered to be a forecast of future profitability or financial position of the Group and none of the information in this document is or is intended to be a profit forecast or profit estimate. Any forward-looking statement speaks only as at the date it is made. The Group does not undertake to release publicly any revision to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date hereof.


56

Contact Details

For further information please contact:

• Group Chief Financial Officer Myles O’Grady tel: +353 76 624 3291 [email protected]

• Investor Relations Darach O’Leary tel: +353 76 624 4711 [email protected] Eoin Veale tel: +353 76 624 1873 [email protected] Philip O’Sullivan tel: +353 76 623 5328 [email protected] Catriona Hickey tel: +353 76 624 9051 [email protected]

• Capital Management Lorraine Smyth tel: +353 76 624 8409 [email protected] Alan Elliott tel: +353 76 624 4371 [email protected] Alan McNamara tel: +353 76 624 8725 [email protected]

• Group Communications Damien Garvey tel: +353 76 624 6716 [email protected]

• Investor Relations website www.bankofireland.com/investor

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